U.S. commercial real estate prices advanced across major property types over the past year, with office buildings posting the strongest gains despite broader market headwinds.
Value-weighted office property prices, more heavily influenced by expensive deals in large markets, rose 3.8% in the 12 months ended in December, according to the CoStar Commercial Repeat Sale Indices. That's a stark difference from 2024, when office prices in the category posted a decline of 11.4%.
That value-weighted index also showed gains for industrial, retail and multifamily properties. That compares favorably to 2024, when only industrial and retail properties posted annual growth in the monthly report that tracks when previously sold properties trade again in a process called a repeat sale.
In 2025, large commercial property brokerages reported an increase in U.S. office leasing. Some markets, such as San Francisco, have benefited from office demand from companies that focus on artificial intelligence.
"The office sector's 3.8% year-over-year price gain signals renewed investor confidence in larger, prime-market developments despite widespread concerns about remote work and occupancy rates," Chad Littell, national director of U.S. capital markets analytics for CoStar and author of the report, said in a statement.
Multifamily assets rose 0.7% annually compared to a decline of 2.3% in 2024. Industrial and retail property prices each climbed 0.4%. Both of those were lower, however, than the 2024 gains of 4.1% for industrial deals and 2.6% for retail.
The equal-weighted index of the CCRSI report, reflecting the more numerous but lower-priced property sales typical in secondary markets, did not fare as well, with office and retail prices falling modestly in 2025. However, industrial and multifamily prices countered those declines, with the overall index showing a 0.3% gain for the year.
"The divergence between value-weighted and equal-weighted indices across property types reveals a flight to quality, with institutional investors favoring core assets in major markets," Littell said.
Regional pricing divides evenly
Regional price changes split evenly across four property types in four U.S. regions in the fourth quarter. Half of the 16 categories showed declines, while the other half posted gains.
The South's value-weighted index rose 1.8% in the fourth quarter and advanced 3.1% on an annual basis. The office sector gained 4.7% compared to the fourth quarter of 2024, while multifamily grew 2.2%, and industrial rose 0.9%. Retail dropped 1.7% year over year.
The Midwest value-weighted segment spiked 7.4% annually. Multifamily advanced 7.5% compared to the fourth quarter of 2024, while industrial grew 4.5% and office gained 3.2%. Retail shed 2.9%.
The Northeast value-weighted index fell 2.7% on a yearly basis despite advancing 1.5% in the fourth quarter. Multifamily prices rose 1.1% since December 2024, while office decreased 3.1%, retail fell 2.4% and industrial declined 2.1%.
The West value-weighted index gave back 5.8% year over year, despite gaining 1.7% in the fourth quarter. Multifamily lost 4.7% compared to the fourth quarter of 2024, office declined 3.2% and industrial fell 2%. Retail gained 0.1%.
"Regional performance variations underscore the importance of local market dynamics, with the Midwest's 7.4% value-weighted surge contrasting sharply with the West's 5.8% decline," Littell said.
The CCRSI report analyzed 19,576 repeat-sale pairs in 2025 and 338,467 repeat sales since 1996.